China's new travel rules unsettle tech giants and talent

China's strict new travel regulations are causing concern among technology companies and skilled workers. These rules allow Chinese authorities to prevent engineers, founders and other specialists from leaving the country if their expertise in critical sectors like batteries, rare earths or artificial intelligence is deemed a threat to industrial and technological security.

Recently, China has also imposed stricter outbound investment rules, cracked down on Chinese nationals holding wealth offshore, and limited the posting of technical staff overseas. Law professor Henry Gao from Singapore Management University believes these measures reflect Beijing's concern over economic weakness and capital outflows.

He adds that the authorities are determined to stop entrepreneurs and skilled personnel from leaving the country. The strain on China's economy is evident, with property prices falling and bank lending at a record low, while new car sales have dropped. High-tech companies are increasingly relocating abroad to avoid investment curbs and market expansion.

Notably, AI startup Manus moved its headquarters to Singapore last year, and Facebook's acquisition attempt was blocked by Beijing. Rumors have circulated about Huawei's founder and CEO Ren Zhengfei and his daughter, CFO Meng Wanzhou, leaving the country. The Chinese government has not tightened its annual $50,000 foreign-exchange quota, but there has been a squeeze on unofficial routes wealthy individuals use to move money around the cap.

This has led to the growth of emigration agents, offshore brokers, and trust services to help people and their capital bypass these restrictions. Law professor Gao warns that these measures may be counterproductive, as it could lead to greater incentive for capital and people to find alternative ways to leave the country, further eroding confidence and accelerating capital flight.